Individuals can expect the federal government to implement more changes to the superannuation system in the years to come to accommodate the changing population patterns that have occurred since the defined contribution framework was first introduced by then-treasurer Paul Keating, a retirement income expert has said.
Speaking at the latest Randstad Leaders Lecture in Sydney today, Challenger retirement incomes chair Jeremy Cooper said: “It’s not a fully formed system yet. It’s under construction.
“What we’re trying to do is change a Paul Keating defined contribution lump sum system that was shooting or solving for a relatively short retirement.
“We’re now trying to change that very large $2.7 trillion into a system that’s shooting for much longer retirement and that’s a pretty big project.”
Cooper pointed out Keating’s original superannuation model was designed to cater for individuals who would retire in their mid-fifties and live until their mid-seventies.
“Life expectancies today for 65 year olds are 87 for males and 90 for females. So the very simple explanation as to why we’re having to evolve this system is that people are just living dramatically longer than it was first designed for,” he noted.
Further, he cited the impact superannuation has on other significant economic parameters as another reason why further government intervention to the system was unavoidable.
“What we’re asking the superannuation system to do keeps changing. It impacts the budget, it impacts things like how long people are living and it impacts things like the dependency ratio, in other words, how many people in the workforce are supporting how many people in retirement,” he said.
“So there are a whole lot of things changing under the super system which then lead it to change.”
